A train of thoughts and writings on development, technology and the economy focusing on the socio-techno-economic-cultural surge of developing economies to regain and partake in leadership of the world. Written by George Easaw. (This is purely an academic site, no commercial use is allowed. Photography rights lie with the respective organisations). Mention credits as needed.

Tuesday, August 08, 2017

Understanding the water and energy intensity of industries ..

Modern day industries depend heavily on water and energy, the two vital components of survival.

We use water in all our daily uses preparing food, for agriculture that gives us food, livestock that gives us proteins, meat etc and industrial use. It is said that more than 70% of water use in developing countries is for agriculture while it is about 30% in the developed countries. Combined with water, the other important component of growth, development and human life is energy. We need energy to power up our homes, kitchens, automobiles that guzzle non-renewable resources like fossil fuels and finally for private and public transport and industrial uses.

The graph given here , courtesy Ross et al, HBR, gives us a measure of the energy and water intensities of use across industries in developed countries.

First of all we come up with three areas A, B and C in the graph.

Area A (bottom left) where the the water intensity (measured in units of cubic metres of water per million US dollars of sale) against the energy intensity (measured in units of Megawatt per million US dollars of sale) is linearly proportional, ie, in the region between 100 and 500 cu m of water and 100-200 MW of energy per million US dollars of sale. This Area A (green class) includes Technology companies like IBM, TCS, Accenture, Google, Infosys etc. All telecommunication companies like China Mobile, Vodafone, Airtel etc fall in this group. Once the telecom infrastructure is in place, we find these companies need very less inputs in terms of water and energy. Defence, Manufacturing, automobile manufacturing like Toyota, Renault, VW etc and health care including hospitals, pharmaceutical companies fall in this category. We can also call them the green industries, to signify the relatively low levels of water and energy usage intensity per million dollars of sales.

Area B (orange class, centre) includes industries where the water and energy usage is slightly on the higher side, we find in these industries like food processing (Brittannia, Nestle etc), beverages (Coke Pepsi etc) , hospitality, oil, gas and coal industry that includes conventional transportation industry, the water intensity is in the region of 1000-7000 cu m of water per million dollars of sale while the energy intensity is in the range of 300-1000 MW of energy per million dollars of sale. We call these industries the orange group of industries as they have greater pollution potential than the type A green class of industries. A society should try to invest in less of these industries for better sustainability of the environment.

Area C (red class, top right) includes industries that have water usage intensity in the range of 10,000 to 90,000 cu. m. and energy usage intensity in the range of 2000-8000 MW of energy per million dollars of sale. The industries that fall within this category are energy utilities like thermal, nuclear and hydro electric power plants and metal processing and chemical industries, which includes tyre, paints, chemicals etc.

We find technology industries like Information technology, chemical technology etc use the least of both these resources while the oil and gas industry uses energy on an average scale while energy utilities in organisations have the highest combination of use of both these resources. The more modern electronic commerce class of Industries also fall in this category as they have less warehousing needs (Alibaba model) and thus energy needs and slightly higher transportation energy needs, with very less water consumption intensity.

In densely populated cities and urban areas and societies which are very concerned about environmental pollution and safety hazards, it is better to have industries of the Green class or Type A industries that are technology based, automobile, defence, manufacturing health care etc. In areas less populated, the orange and red class of industries can be setup.

Employment potential is higher in the case of green class industries in comparison to orange and red classes of industries.

Airline industry is a vast and important sector in any economy and we find its water intensity is very less (in the range of 40-50 cu m of water usage/million dollar sales) while energy usage intensity is on the higher side (in the range of 5000-6000 MW of energy usage/million dollar sales). The same can be said about the retailing sector as they have huge warehouses, transportation networks to power up with comparitively less usage of water We put them in the orange class of industries considering their higher energy intensity over water intensity.

The above chart is plotted for industries that are supplied by the conventional non-renewable sources of energy like thermal, oil and gas etc. As industries get supplied by renewable sources of energy like solar, wind, tidal etc, which is more efficient in generation and transmission compared to conventional forms of non-renewable sources of energy, the points get closer to the Y-axis, or the slope of line joining the industries increases, or the line becomes more vertical. Usage of electric driven vehicles in transportation is thus a big game changer in the transportation sector.

As industry develops and energy gets cheaper and widely available, we find water still remains the bottleneck as mankind is yet to produce great technologies that help reduce water consumption in major industries, Unless we are able to come up with a really cheap industrial class desalination technology to convert salty seawater for potable use in homes and industries, we are still at risk in future of running into water scarcity. Really as James Ferguson in the April 2015 Newsweek article highlighted, the next global war will not be over boundaries or economic might, it will be over water.